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Democrats, Republicans Agree U.S. Airlines Should Not Be Subject To EU Carbon Tax

Just before its recess, the Senate unanimously passed a bill to prohibit U.S. airlines from joining the EU carbon trading scheme. The European Commission added airlines to the scheme as of January 1, 2012, including all carriers flying in EU airspace. It has been applying the EU emissions law to all airlines since then, despite protest from most non-EU countries. The U.S. law comes on the heels of similar laws in Russia, India, and China, the latter of which has also threatened the EU with impounding European planes in China should the EU Commission attempt to fine Chinese airlines for not complying with the emissions law. The deadline for airlines to comply with the law or face fines is April 2013.

While at first glance one might expect Democrats and environmentalists to be pushing for inclusion in the EU trading scheme, in fact the issue here is less about CO2 emissions than it is about taxes and what they fund. Under the current version of its law, the European Commission is taxing the fully trip of any airline that crosses EU airspace.

“That means on a Doha-London flight, the European would tax the entire journey, although only a small portion of the total elapsed time for such a flight might be within European airspace,” explains Anita Mosner, an aviation law expert and partner in the Washington, D.C.-based law firm Holland and Knight.

Theoretically, the various other countries or regions involved in such a flight could tax their portion. And whether or not they decide to, it’s still not kosher for the European Union to essentially be collecting tax for use of a resource–or, in this case, pollution of a resource–that does not belong to it. According to Mosner, if the EU’s emission law were amended to apply only to the portion of a flight within EU airspace, the rest of the world’s airline industries would not have such a problem with the law. “The world’s carriers would not necessary oppose the application of ETS solely within European airspace, or for portions of international flights operated within European airspace,” she says. “The real sticking point is that under ETS, the Europeans would impose their tax on flight operations quite distant from European airspace.”

The U.S. law puts pressure on the European Commission to rethink enforcement of its emissions laws. It could also help speed the adoption of a global agreement amongst airlines to reduce emissions via the U.N. International Civil Aviation Organization (ICAO), which has been working to devise a global alternative to the law.

“ICAO has put forth various schemes for cap and trade and various other policies that would reduce emissions – so it behooves every airline and nation to figure out, if we are going to be regulated under a carbon scheme, which approach is best for me?” says Bob Nicksin, a lawyer and aviation law expert with O’Melveny & Myers in Los Angeles. “There’s a lot to look at with regard to baselines, efficiency, and so forth, and there may well be a difference of opinion on how best to deal with emissions between developing and developed countries.”

All eyes are now on ICAO, which will need to broker an agreement that works for all countries involved. “No one wants to see a trade war between the EU and other countires but at this point there have really not been any solutions proposed that all coutnires seem ready to embrace,” Nicksin says. “We’ll have to stay tuned and see what develops.”

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EU trading scheme has been in place for 7 years and applies to 11,000+ sources. The CO2 from those sources covers the world, the products don’t necessarily start or end in the EU.

The fee is tiny, but even the green king Richard Branson who thinks everyone should pay 1% of their revenues in carbon taxes is fighting it in court. Watch him go to the Clinton Global Initiative and be greeted as a green hero for doing….less than nothing.

The EU can (and should) only regulate what it can control, and it can control take-offs and landings. The ETS applies to all airlines equally. It is non-discriminatory. It applies a fee in line with other industries. If airlines want to fly to and from the EU they should pay for the CO2 emissions *for taking people and things to and from the EU*.

No one owns the airspace over the Atlantic so who would ever ‘charge’ for that portion? No one pays to be flown OVER a country they pay to be flown TO or FROM London etc. There is no service called “fly you over Greenland”. SO you don’t put a fee on “flying over Greenland”. You put a fee on arriving and departing.

The fee has been announced years in advance, is too small, too late and too narrowly defined and now these titans of industry wail and say that $6 on a ticket is going to destroy their industry? You telling me that you can’t innovate in any way to make up that $6? You telling me that YOU odn’t have to pay for your emissions, but everyone else should?

Pathetic.

The EU may be doing little, but at least it is leading, and it is going in the right direction. Get on board and race to finish, instead of sitting behind the startling line and crying and moaning.